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City says JJB may need more financial muscle after profit alert

Greg Lawless, Gary Parkinson

November 12 2010, 12:01am, The Times

A step-up in JJB's promotional activity has taken a toll on gross marginPeter Nicholls for The Times

Fears for the recovery of JJB Sports were revived yesterday after the troubled retailer issued another profit warning. The sportswear group revealed that it had cut prices drastically to shift stock, which damaged profit margins. There are concerns in the City that JJB may need to raise fresh capital, having used the £100 million from last year’s cash call to fund its turnaround plans.

Like-for-like sales rose 11.5 per cent in the third quarter, but the company said that a step-up in promotional activity had also taken a toll on gross margin, which were 37.6 per cent against 46 per cent last year. The sales performance was also flattered by weak comparative figures for the same period last year, when the sportswear retailer had trouble…